Baker Hughes 2010 Annual Report Download - page 7

I want to recognize the contributions of our 53,100 employees who so
professionally serve our customers. Through their dedication we con-
tinue to lead our industry segment in safety and have been recognized
as leaders in innovation.
2010 Annual Report 5
Leveraging Opportunities
The interest in unconventional gas development has spread from North America, and
operators in Europe, China, Australia and Latin America have asked us to present our reservoir
engineering, horizontal drilling and fracturing technology as they consider accessing shale
gas resources.
Offshore drilling, including deepwater activity, continues to increase, and Baker Hughes
remains a leader in this market segment. Despite a slowdown in the Gulf of Mexico, demand for
stimulation vessels has been strong. Our new Blue Dolphin and Blue Tarpon vessels bring state-of-
the-art technology and the industry’s highest capacity to the market. As a result of the merger
we now provide cementing services on 25% of the world’s offshore rigs.
New Technology
Baker Hughes continues to invest more than $430 million per year in research and
engineering, producing an array of new and improved technologies that make the company
more competitive.
For example, our new Kymera™ hybrid drill bit combines diamond and roller cone bit technol-
ogies to drill difficult, variable formations. We have extended our AutoTrak™ line of automated
drilling systems with versions for vertical wells and land-based applications with AutoTrak Curve.
We continue to extend the range of coiled tubing drilling. Our Nautilus™ Ultra logging suite can
acquire petrophysical data in wells with temperatures as high as 500°F. Our completion systems
innovations include the slimhole EQUALIZER system, GeoForm – a newly commercialized well
screen that conforms to the wellbore to improve sand control efficiency, and the FracPoint
Premium multi-stage frac completion system. Our ESP systems are installed on the seabed in
8,000 feet of water in the Gulf of Mexico, boosting oil production in the Perdido field.
Baker Hughes also has focused on green technology. Using our BJ SmartCare™ program, our
experts design and implement frac-fluid programs that minimize environmental impact during
hydraulic fracturing.
Outlook
Looking ahead, we expect the economic recovery to create increased oil demand, which
should support high oil prices and a sustained multi-year expansion of international spending.
We expect North America land activity to remain strong as horizontal drilling and hydraulic
fracturing activity continues to grow. While operators are shifting to liquid and oil reserves, we
expect continued significant shale gas drilling, but we are carefully watching natural gas prices
and their effect on rig activity.
To help drive growth in 2011, we are planning annual capital expenditures of $2.3 to $2.7 bil-
lion, compared to $1.5 billion in 2010. Much of the increase reflects the capital requirements of
expanding our pressure pumping business.
In closing, I want to recognize the contributions of our 53,100 employees who so profession-
ally serve our customers. Through their dedication we continue to lead our industry segment in
safety and have been recognized as leaders in innovation. With the reorganization now in place,
the addition of BJ Services, and the slow but steady improvement in global economic conditions,
2011 is off to a good start.
Chad C. Deaton
Chairman and Chief Executive Officer
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Net Income
2008–2010, by Quarter
(In millions)
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